If you think you’ve been incorrectly assessed a penalty by the IRS, use IRS Form 843 to explain why. The main purpose of the form is so taxpayers have recourse when an IRS agent gives bad instructions or advice. If it’s the IRS’s fault, they’ll grant you partial or all abatement of penalties and if that means a refund then so be it! The name of Form 843 is Claim for Refund and Request for Abatement.
What Else Can I Use Form 843 For?
IRS errors aren’t the only thing Form 843 can be used for. If you are an employer and a mistake was made in withholding for an employee, you can use IRS Form 843 to request a refund.
If you make an error on your federal income tax return which resulted in claiming too much refund or tax credit then you can get slapped with a 20% penalty on the excess amount. If you had a reasonable explanation for making this error, then use IRS Form 843 to request waiver of that 20% penalty. That’s called Erroneous Claim for a Refund.
The Branded Prescription Drug Fee
The newest purpose of IRS Form 843 is for companies who make or import branded prescription drugs. Branded drugs are those that are not generic, as in having a “brand name”. These businesses can get a refund of the branded drug fee by filling out and submitting the form. If you get an IRS letter called Letter 4658, you would use IRS Form 843 to respond to the letter. Letter 4658 is notice of a branded prescription drug fee.
This program is part of the Affordable Care Act (ACA). Drug manufacturers who sell branded prescription drugs to government programs like Medicaid must pay a fee set by the Department of the Treasury.
IRS Form 843 is Simple But the Concepts Behind it Aren’t
If you need to submit IRS Form 843 then you probably shouldn’t go it alone. Get help from someone who really understand taxes and the IRS…like a lawyer. I rarely say this but in this case it’s advisable to get help.